With the new year, families and households are looking at their finances asking how can they do better this year. Can they pay down their consumer debt? Can they save more for retirement? Can they adjust their budget to account for a new spending item? Regardless of the goal, the desire to do better in 2017 makes them ask the question, “At what point do I need a financial adviser?”
People often assume that there is an earnings threshold that you need to meet before consulting an adviser. Income doesn’t dictate the need for an adviser, especially if you are spending all that you’re bringing in; however, if you want help with your budget so that you are able to save, then consulting a financial professional may be a solid first step.
Financial professionals do many different things. Some will simply run a financial projection to tell you how much money you need to retire and if you are on track. Others will just invest your money to grow your assets, while others may take a comprehensive look at everything that touches your financial life, including reorganizing your debt and spending, adjust holdings to improve your tax situation and optimize your insurance coverages.
A comprehensive approach can be a more expensive service, but with a holistic approach, your adviser’s compensation is tied in to growing your wealth. Registered Investment Advisers often charge a fee for assets under management. For a one-time plan a Registered Investment Adviser will typically charge for services based on a flat fee. If you are looking for specific stock recommendations and nothing more, a broker may be more suited to your needs. Brokers are paid commissions, so there must be a transaction for them to be paid. The bottom line is that it is important to know how your financial professional is paid, as then you can judge the impetus of the advice or recommendation they are providing you.
At Henssler, we are fee-based advisers who have to adhere to a fiduciary standard meaning we must provide recommendations that are in a client’s best interest. However, that is not to say all brokers are bad. There are many investment firms out there with very talented brokers. If you want to invest in developing Southeast Asian nations, there is likely a broker whose entire body of research is devoted to such areas. You just need to remember, a broker may not be the expert in all areas. An expert in developing Southeast Asian nations likely will not be able to advise you on whether refinancing your home is a good idea.
So why should an investor hire a professional? The truth is that you can do it yourself. You can follow the Ten Year Rule, invest in exchange-traded funds and use reputable software to file your taxes. Everyone can do well when the markets are rising and the economy is strong. It is when there is a downturn or economic crisis that people most need guidance. A professional will help you focus on the long term, not the day to day fluctuations. A financial expert can temper your emotions to pull your money out of the market at the first 5% or 10% drop.
Furthermore, a financial adviser can offer advice you would not otherwise receive. During a recent client meeting, conversation was casual as the investors’ assets were growing steadily. But, further into the discussion, it was discovered the investor was not taking advantage of a particular tax law. By rearranging some debt and assets, the client was able to save nearly $20,000 a year. This type of savings does not affect market performance, but it does make a considerable difference to his bottom line.
Just as investors have different financial goals, investors have different reasons for seeking out professional help. It is important that whoever you hire fully understands your situation and you have clear expectations on the guidance they will provide you. If you want to explore a comprehensive financial plan tailored to your situation, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166.
Disclosures: This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
